Long-term unemployment hits highest share since 2021 despite strong job growth

A concerning trend is emerging within the United States labour market, where displaced workers are facing increasingly prolonged periods of joblessness. Data released by the Bureau of Labor Statistics indicates that the average duration of unemployment for those seeking work surpassed 27 weeks in October on a seasonally adjusted basis. This figure equates to a job search lasting nearly seven months, marking the longest stretch outside of the pandemic era since 2016. At that earlier point, the US labour market was only beginning to recover from the aftermath of the 2008 financial crisis.

Approximately two million Americans have been without employment for at least 27 weeks, according to the latest report. These individuals are classified as long-term unemployed and now represent 27.6% of all jobless workers in October. This share is the highest recorded since late 2021. Cory Stahle, a senior economist at the hiring platform Indeed, noted that while this specific data series can fluctuate significantly from month to month, the broader trend is unmistakable when viewed over a longer timeframe. This development presents a troubling contrast to an otherwise steady labour market, where companies are adopting a low-hire, low-fire approach. Firms are reluctant to reduce headcount but are equally hesitant to expand their workforces, leaving displaced workers stuck on the sidelines.

Research suggests that extended unemployment carries severe consequences for individuals, including depleted savings, reduced future earnings potential and deteriorating mental health. Economists at the Federal Reserve Bank of Richmond warned earlier this year that prolonged joblessness can create a self-perpetuating cycle. They explained that time spent unemployed may lower the probability of securing future employment, potentially because skills depreciate, professional networks thin out or employers view long gaps in employment as a negative signal. Furthermore, most government unemployment benefits cease after 26 weeks in a year. Consequently, the rising share of long-term unemployed individuals helps explain why initial and continuing jobless claims have remained relatively low, as the average worker now takes longer to find a job than their benefits last.

Despite these challenges for the unemployed, other indicators of the labour market remain robust. Nonfarm payrolls exceeded economist forecasts in October, adding 165,000 jobs, while the unemployment rate edged down to 4.1%. Job openings in September also came in significantly higher than expected, and the number of workers voluntarily quitting their jobs spiked to levels not seen since March 2025. Layoffs and discharges dropped to their lowest volume in over a year. However, recent high-profile workforce reductions may temper optimism. Disney is planning to cut thousands of positions, the latest in a series of reductions this year, while American Express announced a 5% headcount reduction last month as it reorients around artificial intelligence. Elizabeth Renter, lead economist at Life360, observed that positive narratives about the labour market can feel jarring to individuals whose social circles are filled with colleagues who have been job seeking for months.